Economy

Car sales in surprise 24pc jump despite steep price rise

cars

Newly imported second hand cars at a yard in Mombasa on January 18, 2018. Photo | Kevin Odit | NMG

Car sales grew by nearly a quarter in the first two months of the year on rising demand for station wagons despite cost of used vehicles rising by at least Sh100,000 per unit.

Official data indicates that Kenyans bought 13,598 new and second-hand vehicles between January and February, up from 10,981 units in a similar period a year earlier.

Car prices tend to rise in the first quarter of the year as importers rush to secure newer vehicles to comply with the rule that bars importation of vehicles above eight years old. The bulk of imported cars were manufactured in 2011 and the rise in purchase prices during the first quarter slows demand.

Surprise

Dealers expressed surprise at the rise in demand.

Charles Munyori, the secretary-general of the second-hand car dealers lobby Kenya Auto Bazaar Association, said importers cut back on shipments during the first quarter due to the higher vehicle prices.

“The higher demand for 2011 cars came amid limited supply that  pushed up prices by about Sh100, 000 per unit, as does happen in every first quarter. This will, however, ease off from April onwards until next year similar period, other factors held constant,” said Mr Munyori.

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He said that cost of popular second-hand models like Toyota Belta (seven years old) from Japan is up to $8,000 (Sh800,000) from $6,500 (Sh650,000) in December excluding duty, freight and dealers margins.

The price of Nissan X-trail 2011 edition is up to $10,000 (Sh1 million). Mr Munyori said the 24 per cent upsurge in car sales – used and new units was among the highest in many years.

The Kenya National Bureau of Statistics (KNBS) data indicates that station wagons led the pack in sales at 8,384 units in the January-February period, having grown by nearly a third.

Vans and pickups followed having risen 14 per cent to 1,741 units while saloon cars dropped four per cent to 1,459 units in the period. Lorry sales climbed to 1,455 units from 1,057.

Kenya’s car market continued to be dominated by low-priced second-hand imports from Japan.

The KNBS data shows that mini buses and buses were the least bought vehicles in the period at 45 units and 171 units respectively.

Local car assemblers have been seeking to wrest market share from used car sellers who account for about 80 per cent of vehicle sales.

French automaker Peugeot through local dealer Urysia last September started assembly of its brands at Thika-based Kenya Vehicle Manufacturers (KVM) as did German-based Volkswagen, churning out its Polo Vivo model.

Thika’s KVM and Mombasa-based Associated Vehicle Assemblers (AVA) are the only facilities that offer contract production, with Isuzu East Africa running a facility exclusively for its brand of commercial vehicles.

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